TMI Blog2019 (5) TMI 1119X X X X Extracts X X X X X X X X Extracts X X X X ..... 45(3) r.w.s 144. Therefore, the action of the AO is arbitrary in nature and therefore, adhoc disallowance cannot be allowed to sustain - Decided in favour of assessee Disallowance u/s 14A u/r 8D(2)(ii) - as contended assessee has made investment from own funds in securities which fetched exempt income and not from the interest bearing loan funds and therefore no disallowance was warranted u/s Rule 8D2(ii) - HELD THAT:- There is no allegation in the present case before us that the loan funds taken by the assessee from United Bank of India and the Tea Board of India has been utilized for any other business purpose other than for which it was sanctioned and since the loan funds has not been diverted for investment in securities, find force ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny. Aggrieved the assessee preferred an appeal before the Ld. CIT(A) who was pleased to confirm the same. Aggrieved the assessee is before us. 4. I have heard both the sides and perused the records. The AO has disallowed 20% of the miscellaneous expenses claimed by the assessee on the ground that the assessee failed to substantiate such claim by producing verifiable details, therefore, he resorted to adhoc disallowance of 20% of the claim. It has to be kept in mind that if there is any deficiency in the vouchers or the bills supporting the incurrence of expenditure, then at the most the expenses to the extent that which are not supported by the vouchers can be regarded to be non-genuine and can be disallowed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of disallowance made by the AO under Rule 8D(2)(iii). Aggrieved the assessee is before us only challenging the action of the Ld. CIT(A) in confirming the action of AO in respect of disallowance made under Rule 8D(2)(ii). 7. I have heard both the sides and perused the records. The main thrust of the submission made by the learned AR in respect of the ground raised before us is that the assessee has made investment from own funds in securities which fetched exempt income and not from the interest bearing loan funds and therefore no disallowance was warranted u/s Rule 8D2(ii). According to the assessee since the assessee possessed mixed funds which includes its own funds in sufficient quantity, a presumption that its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a. From United Bank of India 3,70,67,993 For working capital requirements b. From Tea Board-Special purpose Tea Fund Scheme 44,88,603 Replanting in Heelakah Tea Estate c. Long Term Loan from Bank 34,04,400 For purchase of plant machinery 8. Taking our attention to the above chart, he submitted that the assessee had own funds which is more than sufficient ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ground no-1 raised to that effect is fails and it is dismissed. 9. Thereafter, I note that in that case in the assessee s own case for A.Y. 2009-10, the Tribunal has taken into consideration the similar chart which is given in page no 3 and 4 of the order which is as under: Sl No. Sources of funds Amount (Rs) Utilisation 1. Share capital and Reservs Surplus 11,41,24,395 For investments and other operating activities 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted by the assessee for making investment in the shares for non business purposes. Since the facts are similar and there is no allegation in the present case before us that the loan funds taken by the assessee from United Bank of India and the Tea Board of India has been utilized for any other business purpose other than for which it was sanctioned and since the loan funds has not been diverted for investment in securities, I find force in arguments of the learned AR that no disallowance on account of Rule 8D(2)(ii) was warranted and therefore, we direct deletion of addition made by applying Rule 8D(2)(ii). 11. In the result, the appeal of the assessee is allowed. Order is pronounced in the open court on 15 May ..... X X X X Extracts X X X X X X X X Extracts X X X X
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